Not a football match

On Aug. 5, Minister of Trade, Industry and Energy Sung Yun-mo announced a government plan to invest 7.8 trillion won (＄6.4 billion) in materials, parts and equipment industries over the next seven years to help reduce Korea’s dependence on Japanese products. [NEWS1]

Kim Dong-ho The author is an editorial writer at the JoongAng Ilbo.

Korea beat Japan in the round of 16 match at the FIFA U-20 World Cup in June with relatively new players. The young Taeguk Warriors ultimately went on to take second place, but why did Korea’s win over Japan leave a more memorable impression? It’s probably because Japan is Korea’s oldest enemy. Anything that has to do with competing against Japan empowers Koreans to come together as one and root for the country — even if the football match is held well past midnight.

But it is different with the economy. The government’s rhetoric — “Korea won’t be defeated again by Japan” — alone cannot solve the problem. The economy is not a sports game, where a team can win with a few good players, a good strategy and some luck. Let’s talk about some facts — say, the Nobel Prize, for instance. Twenty-three Japanese or Japan-born people have won the Nobel prize in a science field (physics, chemistry, physiology or medicine) since 1949, decades after the launch of the Meiji Revolution when modern science was adopted. Today, 70 years after Japan won its first Nobel prize, the country has created a huge gap with Korea in the science field and a Korean has never been mentioned as a Nobel prize candidate in a science category.

Korea may appear scientifically developed on the outside. Korea’s per capita gross national income is more than $30,000, and it is home to several global companies such as Samsung Electronics and Hyundai Motor. But underneath that glamour, there is a different reality. Korea imports a bulk of its materials, components and equipment needed for semiconductors and smartphones from other technologically advanced countries like Japan, the United States and the Netherlands — a result of the global value chain.

Japan decided to impose economic restrictions on Korea because it has weaknesses in those semiconductor and smart phone fields. Korea’s accumulated trade deficit with Japan over the past 54 years was $604.6 billion. Throughout Korea’s trade history with Japan, it has been financially beneficial for Korea to import materials, components and equipment needed for its domestic industries from Japan, which is why Korea has been reliant on Japan. The Korean government has been keen to develop those parts on domestic soil, but very few people have shown interest.

The Korean government stirring anti-Japanese sentiment and telling Koreans not to chicken out — as if this were some sort of football match — is like telling a bunch of amateur players to face off against Son Heung-min and Lee Kang-in. Samsung Electronics is currently testing hydrogen fluoride imported from Chinese and Taiwanese companies, but it remains to be seen if they can replace Japanese imports.

If Korea truly wants to “beat” Japan, it should at least create a suitable environment for domestic companies to compete with their Japanese counterparts. In that sense, it was a positive sign when President Moon Jae-in recently said that Seoul needs to “take a long breath” to think about a fundamental solution to the issue rather than “emotionally responding” to Tokyo’s trade restrictions. Contrasting these cool-headed remarks is a comment from Kim Hyun-chong, second deputy director of the Blue House National Security Office, who said that only “a handful” of strategic materials imported from Japan will be affected by Tokyo’s export restrictions.

The Korean government vowed to develop our own technology for 100 materials, components and pieces of equipment to replace Japanese imports, saying 20 will hopefully be developed within a year and the rest within five years. But that alone is not enough to reassure local companies. Seoul said it would allow Korean companies dealing with Tokyo’s export restrictions to receive a special exemption from the 52-hour workweek. But so far, only two companies have been granted such a status.

The government must halt its anti-market, anti-corporate policy experiments right away and let the Korean market play this economic football match against Japan.